Acquisitions

9 Months Ended

Sep. 30, 2023

Great Western Bank. On September 15, 2021, the Company entered into a definitive agreement (“Agreement”) to acquire 100% of the outstanding stock of Great Western Bancorp, Inc. (“Great Western”), the parent company of Great Western Bank (“GWB”), a Sioux Falls, South Dakota based community bank with 174 banking offices across Arizona, Colorado, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota (“GWB acquisition”). The GWB acquisition expanded the Company’s geographical footprint with an enhanced platform for future growth. Consideration for the acquisition was $1,723.3 million, consisting of the issuance of 46.9 million shares of the Company’s Class A common stock valued at $36.76 per share, which was the opening price of the Company’s Class A common stock as quoted on the NASDAQ stock market on the acquisition date. The acquisition was completed on February 1, 2022.

The Company accounted for the transaction under the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires purchased assets and liabilities assumed and consideration exchanged to be recorded at their respective estimated fair values at the date of acquisition. The determination of estimated fair values required management to make certain estimates about discount rates, future expected cash flows, and market conditions at the time of the acquisition, as well as other future events that are highly subjective in nature.

The following table provides the purchase price allocation as of the acquisition date and the Great Western assets acquired and liabilities assumed at their estimated fair value as of the acquisition date, as amended for measurement period adjustments. We recorded the estimate of fair value based on valuations at the acquisition date. The excess value of the consideration paid over the fair value of assets acquired and liabilities assumed was recorded as goodwill. The purchase price allocation resulted in goodwill of $479.3 million, of which $31.7 million is deductible for income tax purposes. Goodwill resulting from the acquisition was allocated to the Company’s one operating segment, community banking, and consists largely of the synergies and economies of scale expected from combining the operations of Great Western and the Company. All amounts reported were finalized during the fourth quarter of 2022.



As of February 1, 2022

Assets acquired:
Cash and cash equivalents	$	2,006.9
Investment securities	2,699.0
Securities purchased under agreement to resell	101.1
Loans held for sale	217.0
Loans held for investment	7,705.0
Allowance for credit losses	(59.5)
Premises and equipment, including right of use lease assets	144.7
Other real estate owned	15.8
Company-owned life insurance	186.6
Core deposit intangibles	50.1
Customer relationship intangible	22.8
Mortgage servicing rights	1.3
Deferred tax assets, net	60.2
Other assets	200.8
Total assets acquired	13,351.8

Liabilities assumed:
Deposits	11,688.0
Securities sold under repurchase agreements	74.0
Accrued expenses and other liabilities	110.4
FHLB advances	122.9
Subordinated debt	36.4
Subordinated debentures held by subsidiary trusts	76.1

Total liabilities assumed	12,107.8

Net assets acquired	$	1,244.0

Consideration paid:

Class A common stock	1,723.3
Total consideration paid (1)	$	1,723.3

Goodwill	$	479.3

(1) Includes $13 thousand of cash paid in lieu of fractional shares.

For a description of the fair value and unpaid principal balance of loans from the GWB acquisition, as well as the methods used to determine the fair values of significant assets and liabilities, see “Note 2 – Acquisitions” in Part IV, Item 15 “Notes to Consolidated Financial Statements” within our Annual Report on Form 10-K for the year ended December 31, 2022.

There were no acquisition related expenses related to the GWB acquisition for the three and the nine month periods ended September 30, 2023. There were $4.0 million and $115.0 million of acquisition related expenses related to the GWB acquisition for the three and the nine month periods ended September 30, 2022, respectively. During the three months ended March 31, 2022, the Company contributed $21.5 million to the First Interstate Foundation and reimbursed an aggregate of $8.2 million of the Scott family control group’s acquisition expenses pursuant to the Agreement.

The accompanying consolidated statements of income for the three and the nine months ended September 30, 2023 and 2022, include the results of operations of the acquired entity from the February 1, 2022 acquisition date. The disclosure of GWB post-acquisition revenue and net income is not practical due to the combining of certain GWB operations with and into FIB as of the acquisition date. GWB was merged with our existing bank subsidiary, FIB, contemporaneously with the closing of the parent company merger. The core system conversion was completed on May 23, 2022.

The following table presents certain unaudited pro forma financial information for illustrative purposes only, for the three and the nine month periods ended September 30, 2022 as if GWB had been acquired on January 1, 2021. This unaudited pro forma information combines the historical results of GWB with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition occurred at the beginning of the year prior to the acquisition. The unaudited pro forma information does not consider any changes to the provision for credit losses resulting from recording loan assets at fair value, cost savings, or business synergies. As a result, actual amounts would have differed from the unaudited pro forma information presented, and the differences could be significant.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022		2022


Total revenues	$	314.0	$	883.5

Net income	$	90.3	$	267.8

Earnings per common share (Basic)	$	0.85	$	2.60
Earnings per common share (Diluted)	$	0.85	$	2.60